Around this time of the year, readers always ask for my top stock picks and
forecasts for the year. So here are four stocks I will be watching closely
as 2019 unfolds.

Enbridge Inc. (TSX: ENB).This widely-held utility was on my list last year. At that time,
I wrote, “The stock’s performance this year will tell us whether the market
can come to terms with the enlarged company and the new business plan. If
investors remain skeptical, the share price will flatline, despite the
attractive yield.”

It did worse than flatline. In early January last year, the shares were
trading in Toronto at close to $51. They closed on Friday at $47.92.
Enbridge has been reporting decent numbers, and the yield is up to 5.6%,
but investors still aren’t convinced.

Complicating the outlook further, the company has run into political
resistance in Minnesota over its plans to upgrade its Line 3 pipeline,
which had previously obtained approval from state regulators. It also faces
opposition from the new governor of Michigan over its proposal to replace
the aging line that runs under the Straits of Mackinaw.

The company will probably raise its dividend by another 10% or so this
year. Whether that will be enough to give the stock a boost is anyone’s
guess. But as things stand right now, this appears to be an undervalued
company, and unless the whole market melts down, we could see the price
back in the $50 range by year-end.

Apple Inc. (NASDAQ: APPL).
On a price-earnings basis, Apple was the most reasonably priced major tech
stock. But that didn’t stop the shares from losing nearly 40% since its
high last October, after the company announced a big revenue shortfall in
the fourth quarter.

Some commentators are now describing Apple as a spent force that has lost
its technological lead and is faced with a deteriorating market for its
number-one product, the iPhone. Looking back, Microsoft was once described
in the same way but managed to reposition itself and remains a potent force
to this day. Don’t bet against Apple doing the same.

Still, the company has to contend with several headwinds, not the least of
which is the U.S.-China trade war, which Apple CEO Tim Cook said is one of
the main contributors to the revenue shortfall. On a p/e basis, the stock
looks like good value at 18.5 (it closed on Friday at US$170.41, up nearly
20% since the beginning of the year). Whether investors continue to see it
that way will be one of the key stock stories of the year.

Suncor Energy Inc. (TSX: SU). This is Canada’s largest petroleum company, and its stock is a bellwether
for the industry. The shares hit a high in Toronto of $55.47 in mid-2018
but trended down to the end of last year. But things turned around in the
new year, and Suncor has steadily rallied, closing Friday at 42.81, up 20%
since its low on Dec. 24.

If energy stocks continue to rally (and it’s a big if), Suncor could move
significantly higher over the next 12 months, potentially to the $48-$50
range. The stock has started the year well. We’ll see if that pattern
holds.

Royal Bank (TSX: RY). Just as Suncor is a proxy for the energy sector, Royal Bank is the leader
among financials. As it goes, so goes the sector. Last year was a bad one
for bank stocks, which came as a bit of a surprise as they usually prosper
during periods of rising interest rates. That didn’t happen this time
around – the sector was down 12.5% on the year and Royal Bank fell 17% from
its January high of $108.52 to a low of $90.10 in late December. It has
since staged a decent rally, closing Friday at $100.91, up about 12% from
its December low.

Concerns about a slowing economy hurting bank earnings plus persistent
worries about the still-overvalued housing markets in Toronto and Vancouver
have contributed to pushing bank shares lower – perhaps too low. Thanks to
a recent dividend increase, RBC stock now yields 3.8%. That’s an attractive
return from Canada’s largest bank. According to Yahoo! Finance, analysts
have a one-year estimate of $111.79 on the stock. That strikes me as a
little optimistic, but it would not surprise me to see the shares flirting
with $100 by year-end.

Gordon Pape
is one of Canada’s best-known personal finance commentators and
investment experts. He is the publisher of
The Internet Wealth Builder and The Income Investor
newsletters, which are available through the Building Wealth website.

The foregoing is for general information purposes only and is the opinion
of the writer. Securities mentioned carry risk of loss, and no guarantee of
performance is made or implied. This information is not intended to provide
specific personalized advice including, without limitation, investment,
financial, legal, accounting, or tax advice. Always seek advice from your
own financial advisor before making investment decisions.